FarCry Industries a maker of telecommunications equipment ha

FarCry Industries, a maker of telecommunications equipment, has 3 million shares of common stock outstanding. 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the commorn shares are selling for $29 per share, the preferred shares are selling for $15.50 per share, and the bonds are selling for 98 percent of par What weight should you use for debt in the computation of FarCry\'s WACC? (Round your answer to 2 decimal places.) Weight used

Solution

Weight Used = 8.73%

Capitals

Calculation

Total Value

Weight

Common Stock

$30,00,000 x $29

$87,000,000

77.47%

Preferred Stock

$10,00,000 x $15.50

$15,500,000

13.80%

Debt

[10,000 x $1000] x 98%

$9,800,000

8.73%

$ 112,300,000

100%

Therefore, Weight Debt used for the computation of FarCry’s WACC = 8.73%

Capitals	Calculation	Total Value	Weight
Common Stock	$30,00,000 x $29	$87,000,000	77.47%
Preferred Stock	$10,00,000 x $15.50	$15,500,000	13.80%
Debt	[10,000 x $1000] x 98%	$9,800,000	8.73%
		$ 112,300,000	100%